This page has been archived and commenting is disabled.
Krugman: War Is BAD for the Economy
We pointed out in 2009 that war is bad for the American economy. We noted in 2012 that military spending as “stimulus” can’t work, because conditions are different than they were in World War II.
We’ve reported for years that economists (like Paul Krugman) who believe that war stimulates the economy are wrong. We exhaustively debunked this claim again just last month.
Mr. Krugman has now changed his mind. He wrote yesterday in the New York Times:
If you’re a modern, wealthy nation, however, war — even easy, victorious war — doesn’t pay. And this has been true for a long time. In his famous 1910 book “The Great Illusion,” the British journalist Norman Angell argued that “military power is socially and economically futile.” As he pointed out, in an interdependent world (which already existed in the age of steamships, railroads, and the telegraph), war would necessarily inflict severe economic harm even on the victor. Furthermore, it’s very hard to extract golden eggs from sophisticated economies without killing the goose in the process.
We might add that modern war is very, very expensive. For example, by any estimate the eventual costs (including things like veterans’ care) of the Iraq war will end up being well over $1 trillion, that is, many times Iraq’s entire G.D.P.
So the thesis of “The Great Illusion” was right: Modern nations can’t enrich themselves by waging war.
This is a huge sea-change from America's best-known Keynesian, and we thank Mr. Krugman for re-examining the evidence.
- advertisements -
I'll acknowledge that he is right when he's right. And he's right in this case. He's still a smug jackass who deserves to be bashed. Ever come across a situation where you can have it both ways?
If state A defeats state B in a war and then takes their stuff-->and that stuff is worth more to state A than the cost state A incurred defeating state B-->then that war was economically stimulative to state A.
Wars can also be cost/benefit positive for victors if they remove a parasitic entity like piracy or even just weaken the competition.
Not all economies are particularly sophisticated, especially when they are based almost exclusively on a single natural resource.
From a purely practical standpoint it's the "sophisticated" politics that usually make modern wars unprofitable (in aggregate that is - someone always makes a buck). The people killing and stuff taking part is still pretty straight-forward.
Somebody must have broken one of the bearded potato's windows.
Perfect, ebworthen.
I am not going to believe it until I hear him say it. No one reads the NYT so this could just be him being sarcastic, like when he wrote that the best thing for the economy would be if extra terrestrials attempted to invade earth.
Only when you aren't breaking your own windows. Harder to create local jobs and stimulate the economy if those windows needing replacing happen to be outside the US.
Have you seen the hourly rate haliburton will pay for "assistant to the junior apprentice plumber's helper" to build the new US embassy in Iraq?
They just need to make sure that worker returns to the USA after the assignment, instead of heading to a non-USA country with all the loot. This might be what Krugman is trying to say.
$148,000 a year before performance bonus.
It is called hazard pay iirc that is why they pay well above the going rate. You trying getting a competent local plumber to underpay. You still have get them a security clearance. It adds up since you quickly run out of candidates once you start with the security clearance thing. Besides where are you going to find references for a local in Iraq that you can trust unless the guy is already vouched for by someone already on the inside.
But we like war.
We are a war like people
Did you intend to quote President Kimball?
Krugman the whore is changing his tune to stay ahead of the herd. Never bite the hand that feeds you or the master that beats you.
He also was against deficit spending/debt when Bush was in office and then for it during Obama's. I guess you can never be wrong when you take both sides of an argument. But it doesn't stop him from being regarded as a hack.
War is bad for modern, wealthy nations. Alien invasions are good for all nations.
Do you understand this?
Yes if the Aliens are Amazons!
They make children and DO ALL THE WORK.
That works only if you know you're being invaded...
Krugman has prostituted his PhD for a political agenda...
WB; Good one looks like Rasputin or Marco Polo working for Ghangis Kahn.
No doubt, his War on the Middle Class continues on unabated.
He is a Shaman, he works for Kublai Khan.
He blows with the divine wind.
Sun Tzu correctly points out in "The Art Of War" that warfare is costly and ultimately a destroyer of resources, and can easily impoverish both the vanquished AND the victor (if the war is not swift or meritous).
Given that ancient generals could see such wisdom thousands of years ago, one must wonder why modern fools would believe in the economic benefits of broken windows.
Yet somebody always profits...
Partly because of the meme that WWII brought us out of the depression. It did, in a sense. It got rid of some of FDR's harmful economic policies, such as wage controls, and the US was the only country standing with productive capacity after the war was over. That meant that the rest of the world needed shit that only we could produce. Captive markets and all. We won't have that advantage this time around. A major war would destroy this country, even if it didn't go nuclear.
a major impetus behind the post WWII recovery was the availability of savings. because of wartime rationing, there were de facto limits on what people could consume. hence, almost a forced savings. those savings were then deployed as capital once the war ended and consumption restrictions ended.
hundreds of millions of people died in WWII as well. This eased the burden on resources, allowing for re-allocation and re-investment of those resources.
Let me be clear, there simply is not, nor will there every be, a political, economic, or monetary solution to resource scarcity.
Yeah well, for Germany maybe. Sun Tzu needs to say hello to the Kaiser while we're on the subject. Hitler might have failed in liberating the Germans but it wasn't for lack of trying.
It was "only" around 40 million. And no, that didn't solve the problem of resource scarcity in Europe either. (Buy a liter of fuel there even today.)
Again...the problem is fiat money "determining" resource allocation. Needs to be turned around...resources need to allocate the money "as they always do anyways."
Yeah but those generals had to pay their armies in silver and booty. Now we pay with GI Bill's and fiat. Easier to fund a war borrow at 4%.
JailBank
He is quite the Politician.
Paul Krugman cannot be understood except in terms of Bribery OR Politics. Status Quo is the Provence of both Democrats & Republicans.
Neoliberal, Anything Goes Government Economics.
Krugman gives Bow-Jobs for compensation...... Krugman is Greece if you look at Universities.
It is getting more clear even to the sheeps that the DEBT of the USA is going into WARS. Having or buying dollars means financing WAR. In many cases holding $$$ means giving money to your enemies who slaughter you and your family. I think we are going to experience the fall of IMF, being curious what form will FED morph into.
Did you ever notice that EBT is 3/4 of the word DEBT?
And B.O. is 40% of eBOla...
"Modern nations can’t enrich themselves by waging war."
which only raises the puzzling question:
if a moden nation can't enrich itself by waging war, then why do it??
hugs,
Ray Theon, Lock Heed, and the owners of the Federal Reserve
"Modern nations can’t enrich themselves by waging war. which only raises the puzzling question: if a moden nation can't enrich itself by waging war, then why do it??"
A country is the people and the land they occupy. A nation is the government and elites that occupy the country. Nations do enrich themselves from war, "War is a racket," but from the blood, sweat and toil of the countries they occupy and subjugate. Think of the Rothschild banksters and the MIC of the DC US nation vs the American people and various peoples of the rest of the world--Vietnam, Iraq, Afghanistan, Panama, Grenada...
An American, not US subject.
A country is the people and the land they occupy. A nation is the government and elites that occupy the country. Nations do enrich themselves from war, "War is a racket," but from the blood, sweat and toil of the countries they occupy and subjugate.
Well, that's one of the best things I've read in a long while. (And I read my butt off, even if you can't tell from my, um, selfie.)
An American, not US subject.
That day will come when the Rome-on-the-Potomac has been carted off to the garbage heap of history, which is coming far sooner than even those who think about it think it will.
It's like the famous exchange in Hemingway's The Sun Also Rises:
"How did you go bankrupt?"
"Gradually. Then suddenly."
Thanks, repeat the message to all that need know
An American, not US subject.
The reason we have so much debt is because we bailed out Wall Street not because of the war. You could argue the war has been and always was for the benefit of Wall Street of course. It's not like there is any shortage of capital formation here in the USA. "So why are we paying so much for the F-35 again?" Who exactly is that plane going to attack cuz it sure isn't attacking anyone right now.
"The reason we have so much debt is because we bailed out Wall Street not because of the war."
Here is a picture of a bond. Says, United States of America. There is no "we" or even my name on it.
And "we" are not paying for anything, anymore than we are paying for what a mugger buys with what he robs from us.
An American, not US subject.